Thank you for raising this question. Seems like it needs more explanation in the interface and in Help file. For now I will try to explain it here:

Compare Options are those properties of any item which helps us determine whether the items in both files are actually the same. IF all the checked properties coincide, then, the item is considered to be the SAME item in both files AND then comparison of "last modified" property goes. If it turns out that the "last modified" is different, then one item is considered to be upadated and the other one (in second file) outdated and copying is done (updated item overwrites the old one).

If not all the properties of items (defined in Compare Options) coincide and no item can be found to match, then the item is considered to be a new one (and it is copied, not overwriting any other item).

Hope I explained it sufficiently, please do not hesitate to ask if something is unclear.

Taking above into attention, it would not be wise to use "last modified" as one of the properties to determine matches, as then every updated item will be considered a new one and will be copied, rather then overwriting the match.